Chinese factory, consumer sector stumbles on COVID-19 turmoil

China’s factories and retail sector slumped in August, with new coronavirus outbreaks and supply disruptions threatening the country’s remarkable economic recovery, hitting production and sales growth at its lowest level in a year. bottom.

According to data from the National Bureau of Statistics, industrial production in August increased by 5.3% year-on-year, down from a 6.4% increase in July, the lowest pace since July 2020. Production growth missed the 5.8% increase suggested by analysts.

Private consumption was also hit hard by the rise in local COVID-19 cases and floods, with August sales up only 2.5% from a year ago, well below the projected 7.0% increase last year. It was the latest clip since August.

“Recent economic data show that overall demand remains vulnerable to the economy and vulnerable to sporadic COVID-19 outbreaks,” said Nee Wen, an economist at Shanghai-based Fabao Trust. Reflecting this, some sectors are overheating as commodity prices remain high. ” ..

“Policymakers will face a dilemma in how to deal with this situation.”

Supply chain bottlenecks, semiconductor shortages, curbing highly polluted industries, and crackdowns on the real estate sector are disrupting the world’s second-largest economic activity.

China’s car sales fell for the third straight month in July, partly due to a global shortage of car chips.

Some steel producers in China’s Jiangsu, Fujian and Yunnan provinces have been ordered by the government to cut production as the country seeks to curb industrial pollution.

China’s economy has made a markedly strong comeback from last year’s coronavirus-led slump, but has slowed in recent months and will provide more support to help policymakers struggle. There are growing expectations that it may be necessary.

Social restrictions due to the COVID-19 delta mutation in some states have hit the catering, transportation, accommodation and entertainment industries.

Service activity in China shrank in August, and regulations to curb COVID-19 closed some shopping malls and many businesses in the country again, according to a private sector survey.

KFC operator Yum China Holdings Inc hit 50% to 60% in adjusted operating profit on Tuesday as restaurants closed due to the spread of Delta variants in China and “sales fell sharply.” He said he would receive it.

Julian Evans Pritchard, Senior China Economist at Capital Economics, said: However, he added that new outbreaks in southern Fujian could hinder recovery.

Focus shifts to real estate

China’s real estate investment in August rose 0.3% from a year ago, the slowest pace in 18 months, but new home prices rose 8 as official crackdowns on speculative purchases hit demand. We eased the low price for the first time in a month.

Evans-Pritchard said short-term virus-related turmoil should prove to be temporary, but restraint in the real estate sector and slowing exports could weigh on long-term growth. Stated.

Fixed asset investment increased 9.0% in Reuters polls, up 10.3% from January to July, while it increased 8.9% from January to August compared to the same period last year.

Analysts expect China to accelerate spending on infrastructure projects later this year.

Chinese factory, consumer sector stumbles on COVID-19 turmoil

Source link Chinese factory, consumer sector stumbles on COVID-19 turmoil

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